South Africa continues to stand out as one of the continent’s most sophisticated and diversified economies, and remains the dominant African mergers and acquisitions market by value. Its strategic position as the gateway to Africa, underpinned by deep and liquid capital markets, an independent judiciary, predictable commercial law and a highly regulated financial sector, makes it a compelling jurisdiction for international investors seeking both direct exposure and a platform for broader continental expansion.

This publication provides a concise overview of the key legal, regulatory and commercial considerations for clients wishing to do business in or invest in South Africa. It is intended as a practical guide to the current landscape, drawing on recent market developments and policy reforms that shape the operating environment in 2026.

Legal System and Regulatory Architecture

South Africa operates a hybrid legal system drawing on Roman-Dutch substantive law, English common law principles and a body of customary law, with the Constitution serving as the supreme law. As a general rule, civil procedure follows English law, while contract law, the law of delict and the law of persons derive from Roman-Dutch common law. The country’s statutory company law, originally rooted in English legislation, is increasingly influenced by international best practice, including Delaware law concepts.

The jurisdiction has a sophisticated corporate, competition and regulatory architecture. Core statutes relevant to commercial transactions include the Companies Act 2008 and its regulations, the Competition Act 1998, the Financial Markets Act, the Broad-Based Black Economic Empowerment (B-BBEE) Act, exchange control regulations issued under the Currency and Exchanges Act, labour legislation (including the Labour Relations Act and the Basic Conditions of Employment Act), the Protection of Personal Information Act (POPIA) and a range of sectoral statutes governing mining, telecommunications, banking, insurance and broadcasting.

Principal regulators include the Companies and Intellectual Property Commission (CIPC), the Takeover Regulation Panel (TRP), the Johannesburg Stock Exchange (JSE), the Competition Commission and Competition Tribunal, the South African Reserve Bank Financial Surveillance Department (FinSurv), the Prudential Authority, the Financial Sector Conduct Authority (FSCA), the Independent Communications Authority of South Africa (ICASA) and the Department of Mineral Resources and Energy (DMRE).

Investment Climate and Confidence Drivers

South Africa remains an attractive destination for foreign direct investment (FDI) by virtue of its diversified economy, strategic location, membership of the Southern African Development Community (SADC) and the African Continental Free Trade Area (AfCFTA), and its position as the continent’s primary financial centre.

Several developments have materially bolstered market confidence in recent periods.

• Removal from the Financial Action Task Force (FATF) grey list, signalling improved compliance with international anti-money laundering and counter-terrorism financing standards.
• Meaningful progress in energy and infrastructure reform, including the liberalisation of private generation and wheeling structures, and the restructuring of Eskom through the establishment of a separate transmission function.
• Subdued inflation and successive interest rate cuts, improving financing conditions and business confidence.
• A credit-rating upgrade, reflecting improved fiscal discipline and structural reform momentum.
• The successful hosting of the G20 and B20, coupled with accelerating regulatory reform.
• The Government of National Unity (GNU) framework, formed after the 2024 election, which has positioned cooperative governance with stated priorities around growth, job creation and building a capable state.

The South African rand, having experienced volatility in mid-2025 amid global trade and policy uncertainty, has since strengthened and outperformed many emerging market currencies, reflecting broader economic improvements and continued investment opportunities in reform-aligned sectors.

Foreign Direct Investment Framework

The Protection of Investment Act ensures that foreign investors are treated no less favourably than South African investors in like circumstances. Critically, South Africa does not operate a general FDI screening regime. Although the Competition Act provides for national security screening by a presidential committee for notifiable mergers involving foreign acquirers and critical infrastructure, these provisions are not yet in force and there is no anticipated effective date.

Notwithstanding the absence of a general screening mechanism, investors must carefully consider sector-specific regulatory frameworks. A number of industries are subject to tailored restrictions: domestic control requirements apply in the air services sector; foreign ownership in commercial broadcasting is capped; and mining, financial services and telecommunications impose fit-and-proper and change-of-control approvals that often interact with B-BBEE ownership targets. Sector-specific advice should therefore be obtained at an early stage of any transaction.

The M&A Market in 2026

Global M&A activity entered 2026 with renewed momentum, yet the market is defined less by exuberance than by selectivity. After several years of macroeconomic volatility, persistent geopolitical tension and elevated financing costs, dealmakers are pursuing strategic transactions with greater discipline and sharper scrutiny of execution risk. Boards and investors are prioritising durability, regulatory preparedness and long-term value creation.

South Africa reflects many of these global dynamics through a distinctly local lens. Domestic deal activity continues to be shaped by evolving competition regulation, transformation imperatives, exchange control reform and sector-specific policy developments.

The market is characterised by measured confidence. The most effective dealmakers in 2026 are those capable of balancing commercial ambition with regulatory acumen, stakeholder engagement and long-term strategic positioning. The emphasis has shifted decisively from speed and scale to execution certainty and adaptability.

Energy remains among the strongest drivers of South African deal activity. Secondary sales of operational renewable portfolios, minority stake disposals and institutional capital deployment into de-risked contracted assets have defined transaction flow. The market’s defining constraint is no longer capital availability but grid access. Consolidation in renewables is expected to continue, with battery storage emerging as a parallel growth theme.

Mining M&A is shifting from traditional scale-driven consolidation toward strategic, value-led transactions shaped by geopolitical developments, supply chain security and commodity exposure. Elevated gold prices act as a near-term catalyst, while access to critical minerals such as copper and platinum group metals underpins the energy transition. M&A continues to provide an alternative to slower, capital-intensive greenfield development. Portfolio optimisation, divestments of non-core assets and jurisdictional diversification have driven considerable activity.

Financial technology and digital payments represent one of the most active areas of M&A in South Africa. Major banks and financial institutions have acquired fintech businesses to secure proprietary technology, reduce third-party dependency and expand digital offerings.

South African banking groups continue to pursue disciplined regional expansion, particularly into East African markets. Domestic players continue to record strong growth through advanced technology and operating models.

Healthcare remains attractive, with portfolio optimisation and multinational capital redeployment driving deal flow.

In telecoms and digital infrastructure, activity is concentrated in fibre networks, tower portfolios and data centres, with investors targeting scalable, wholesale-oriented platforms. Technology-driven transactions continue to dominate strategic priorities, with artificial intelligence, cybersecurity and digital infrastructure assets remaining highly sought after.

Key Regulatory Considerations

Companies Act and Takeover Regulation

The Companies Act 2008 (as amended) provides the core statutory framework governing South African corporate law and M&A, regulating schemes of arrangement, amalgamations and mergers, disposals of all or the greater part of a company’s assets, shareholder approvals, appraisal rights, fiduciary duties and disclosure obligations.

Recent amendments have introduced enhanced corporate governance, transparency and M&A oversight, including expanded beneficial ownership disclosure obligations, extended periods for liability claims and stricter compliance enforcement via the CIPC.

Remuneration disclosure requirements are now in effect for public and state-owned companies, requiring shareholder approval before implementing a remuneration policy (every three years or where there is a material change to the policy) and the remuneration report (which now has more detailed disclosure requirements) annually. Where the remuneration report is not approved in two consecutive years, among other considerations, the non-executive directors on the remuneration committee will be barred from serving on that committee for a further two years (the “two-strike” rule).

Certain other changes, though signed into law, remain subject to the proclamation of an effective date. Most notable among those are the amendments to the triggers rendering private companies subject to the additional scrutiny of the takeover regulations and the TRP. Under the proposed amendments, private companies with ten or more shareholders will fall within the regulatory ambit of the TRP, provided they cross a financial threshold that remains to be finalised. This marks a departure from the existing framework, which applies based on whether the company has undertaken significant transactions within the preceding 24 months. Affected companies intending to enter into fundamental transactions should anticipate increased oversight by the TRP, factoring this into closing conditions and transaction timelines.

King V

The King V Code, market regulation on corporate governance best practice, effective January 2026, marks an evolution in South African corporate governance, streamlining principles whilst sharpening focus on accountability and the rhythm of governance, director independence and expanded guidance on artificial intelligence, whistleblowing, sustainability and responsible remuneration. Companies claiming compliance with King V are also now under an obligation to compile new disclosure templates that need to be approved by the board and displayed on their web-pages.

JSE reforms

The JSE Listings Requirements are the rules governing companies listed on Africa’s largest stock exchange by market capitalisation, regulating disclosure, corporate actions, transaction categorisation and shareholder approvals, with related-party and significant transactions attracting additional requirements.

The JSE has undertaken a comprehensive overhaul of its Listings Requirements as part of a broader simplification initiative, segmenting the Main Board into Prime and General segments alongside AltX, and modernising disclosure and approval frameworks to align with changes to the Companies Act and King V.

Competition/antitrust and public interest

South Africa has a comprehensive competition regime under the Competition Act. The regime regulates, among other things, restrictive horizontal and vertical practices (including price-fixing and market allocation, as well as anti-competitive restraints between parties operating at different levels of the supply chain), abuse of dominance and mergers.

South Africa’s merger control regime under the Competition Act is well established and plays a central role in transaction execution. Transactions meeting prescribed financial thresholds require mandatory notification to the Competition Commission prior to implementation. The substantive test assesses whether a merger is likely to substantially prevent or lessen competition and whether it can be justified on public interest grounds.

The Minister of Trade, Industry and Competition, in consultation with the Competition Commission, has amended the merger notification thresholds and merger filing fees in South Africa, notably increasing these trigger thresholds with effect from 1 May 2026.

There remain two categories of mergers that attract mandatory notification obligations and require approval prior to implementation. These are intermediate and large mergers. The combined assets or turnover threshold for intermediate mergers raised to ZAR1 billion (with the target being required to achieve at least ZAR200 million in assets or turnover) and for large mergers to ZAR9.5 billion (with the target being required to achieve at least ZAR280 million in assets or turnover). Mergers that fall below the intermediate merger thresholds are categorised as small mergers and may still be notifiable, but only in limited circumstances. The merger filing fees have always been upwardly revised to ZAR220,000 for intermediate mergers and ZAR735,000 for large mergers.

Public interest considerations are firmly embedded in merger analysis. The competition authorities assess the effect of transactions on a range of public interest factors, with conditions imposed more prominently in relation to employment, the promotion of historically disadvantaged persons (HDPs), and worker ownership, as well as the promotion of small and medium enterprises.

B-BBEE and transformation

B-BBEE is a defining feature of South Africa’s corporate landscape, designed to redress the inequalities of the past by promoting the economic participation of black South Africans.

The B-BBEE Act and sector Codes stipulate targets across certain principal elements such as ownership, management control, skills development, enterprise and supplier development, and socio-economic development. The more points a business achieves across these elements, the higher its B-BBEE status level, which translates into a procurement recognition level that determines its ability to contract with government, state-owned enterprises and other measured entities.

The formal introduction of the Transformation Fund framework, alongside ongoing debate regarding the future direction of empowerment policy, underscores the importance of corporates doing business in South Africa proactively engaging with B-BBEE requirements, monitoring evolving sector codes and integrating transformation planning into their broader commercial and investment strategies.

Exchange control and capital flow management

South Africa’s exchange control regime, overseen by the South African Reserve Bank Financial Surveillance Department (FinSurv), should not be viewed as a barrier to investment. While cross-border transactions do require approval for capital movements, including share issuances, loans, guarantees, intellectual property transfers and repatriation of proceeds, this is a straightforward process that requires early planning rather than presenting a substantive obstacle, demonstrating the transaction is at fair value and on arm’s length terms. Authorised dealer approvals typically take days. For approvals that require elevation to the FinSurv, applications generally take four to six weeks.

Proposed amendments to South Africa’s exchange control regime continue to relax certain requirements, while simultaneously streamlining enforcement mechanisms and bringing crypto-assets more squarely within the regulatory perimeter.

National Treasury has earlier this year published Draft Capital Flow Management (CFM) Regulations, which are intended to repeal and replace the current Exchange Control Regulations. The amendments contemplated in the draft CFM Regulations address gaps in the current South African exchange control regulations, including in relation to cross-border crypto asset transactions, which will complement the existing regulation by the Financial Sector Conduct Authority and Financial Intelligence Centre.

Financing Trends

In addition to capital raises through the JSE, businesses in South Africa access capital through multiple channels. Bank financing remains significant, though private credit is playing an increasingly prominent role in M&A financing, offering flexible and competitive structures. Private equity sponsors continue to deploy substantial unallocated capital through continuation vehicles and structured solutions.

Employment

South Africa’s employment and labour regime is primarily regulated by a network of legislation providing minimum protection for employees. The Labour Relations Act regulates collective bargaining, unfair dismissal and unfair labour practices, and business transfers, while the Basic Conditions of Employment Act sets minimum standards for working conditions, leave and working hours. The Employment Equity Act prohibits unfair discrimination and promotes workplace diversity through affirmative action measures.

Of particular relevance to M&A, Section 197 of the Labour Relations Act provides that transfers of businesses as going concerns trigger automatic employee transfers, with continuity of employment. The new employer must employ transferring employees on terms and conditions that are on the whole not less favourable than those previously enjoyed with the old employer. South African law affords employees significant protection against unfair dismissal, and dismissals linked to the transfer of a business are deemed automatically unfair. Merger-related retrenchment moratoria are commonly imposed as competition conditions.

Tax

South Africa operates a residence-based tax system, taxing residents on worldwide income and non-residents on South African-sourced income. The standard corporate income tax rate is 27%. Dividends declared by resident companies are subject to dividends tax at 20%, although this rate may be reduced under applicable double taxation agreements. South Africa has an extensive treaty network that may reduce withholding rates on dividends, interest and royalties. New global minimum tax requirements, also known as Pillar Two, ensure that large multinational enterprises with revenue over EUR750 million pay a minimum 15% effective tax rate on income in every jurisdiction where they operate.

Transaction structuring must consider capital gains tax, transfer duty (on immovable property), securities transfer tax (at 0.25% on share transfers), value-added tax and withholding taxes. Group restructuring relief is available under defined circumstances, and early-stage tax structuring is critical to ensure optimal application of deferral rules and avoid unintended tax consequences.

Data Protection

The primary data protection legislation in South Africa is the Protection of Personal Information Act (POPIA), which regulates the processing of personal information of both natural persons and juristic persons. POPIA applies where the responsible party is domiciled in South Africa, or where a non-domiciled party uses automated or non-automated means to process personal information in South Africa.

Enforcement has strengthened in recent years, with the Information Regulator conducting assessments and issuing enforcement notices. Administrative fines for non-compliance have ranged up to ZAR5 million, with potential imprisonment of up to ten years for serious offences. Data protection compliance, including cross-border transfer considerations, is now a standard due diligence workstream and a material consideration in post-acquisition integration.

Intellectual Property

South Africa’s intellectual property framework is overseen by the CIPC, managing the registration and regulation of IP rights, including trade marks, designs and patents. The legal framework provides clear mechanisms for the protection and transfer of IP. Copyright assignments must be in writing and signed by or on behalf of the assignor to be valid. Transfers of registered IP rights require an assignment agreement (typically required to be in writing), which is recorded by formal filing with the CIPC, while unregistered IP is typically transferred by way of assignment agreements. Cross-border transfers of IP are subject to exchange control approval, which may result in timing delays of approximately three to six weeks.

IP is a key focus area in M&A due diligence, typically assessed alongside data protection, cybersecurity and broader regulatory compliance considerations.

Dispute Resolution

South Africa’s dispute resolution framework is underpinned by an independent judiciary and a predictable commercial law framework that supports contract enforcement. Commercial disputes are typically resolved through the High Court, which operates divisional structures across the country. Recent court reforms have introduced mandatory mediation requirements in the Gauteng Division of the High Court, a procedural innovation designed to address case backlogs and capitalise on the high incidence of settlements occurring immediately before trial. International arbitration is well supported, and South Africa is a signatory to the New York Convention, facilitating the recognition and enforcement of foreign arbitral awards.

Practical Observations

South Africa offers investors and those doing business in the country a compelling combination of advantages. The country is widely regarded as offering deep and liquid capital markets, an independent judiciary, predictable commercial law and a well-regulated financial sector. Its sophisticated and diversified economy is strategically located on the African continent, supported by membership in regional communities such as the Southern African Development Community (SADC) and the AfCFTA.

As cross-border African investment activity continues to evolve, driven by shifting trade dynamics, demand for critical minerals and infrastructure investment among other developments, investors are increasingly viewing South Africa as both a domestic market and a gateway into broader African operations through AfCFTA and other trade pathways.

Recent regulatory reforms and the removal of South Africa from the FATF grey list, alongside progress in energy and infrastructure sectors, have significantly bolstered market confidence.

South Africa welcomes foreign investment, having implemented numerous policies and programmes to encourage FDI, including a wide range of incentive schemes. The Protection of Investment Act ensures foreign investors are treated no less favourably than South African investors in like circumstances, and notably, the country does not operate a general FDI screening regime.

While corporates doing business in South Africa should be aware that in addition to the body of laws pertaining to B-BBEE, exchange control, employment, data protection, anti-money laundering, terrorist financing, and consumer protection, several emerging trends are also notably reshaping the regulatory and commercial landscape. Among these, cybersecurity preparedness, AI governance, ESG considerations and supply-chain integrity are front-of-mind considerations for boards.

Overall, the South African business environment is characterised by largely pragmatic and accelerated regulatory reform aligned with international best practice, underpinned by a high degree of legal certainty.

Those engaging experienced local advisers early are able to capitalise on the meaningful opportunities amid the global complexities that necessitate structuring commercially innovative, legally robust and responsive solutions to a rapidly evolving business landscape.

Disclaimer

This publication is provided for general information purposes only and does not constitute legal advice. Clients should obtain specific professional advice tailored to their circumstances before acting on any of the matters discussed herein.